Managed health care strives to balance cost and quality

Managed health care is supposed contain or reduce costs while increasing quality of health care.

But as a means of funding health care, medical (health) insurance costs are almost always increasing.

How do you resolve this apparent contradiction?

— DSO, Nairobi

An academic question, I suspect, but nonetheless interesting. There are many contradictions regarding costs in medicine generally.

For a start, managed health care is defined as provision of services based on business principles that include the ones you mention, that is, costs and quality.

In addition, managed health care is expected to make a healthy return (read profits) to investors as well as “allow market forces to control health provision. Admittedly, some of these objectives are contradictory. In an attempt to achieve them, various strategies or practices have been employed to the detriment of health care.

Concerning medical expenses (or health) insurance, underwriters face a number of challenges. Holding insurance costs down is unsustainable for long because of increasing health care costs.

Nearly all private medical insurance providers have been experiencing a worsening claims ratio. One reason for this scenario is fraud and over-utilisation of health insurance schemes.

Moreover, as private insurance is optional, many medical insurance providers have a challenge building critical mass while wrestling with the problem of “selection against the insurer”.

The other reason for escalation of costs is another contradiction in the field of medicine. Improved technology in all areas of medicine contributes, not to a decrease but to an increase in ultimate consumer costs. This is unlike many other areas of human endeavour where advancement in technology has resulted in better and cheaper services.

AGING POPULATIONS

In the medical field, research and development for better drugs as well as continued technology improvements from ultrafast CT scanning devices to non-invasive surgery, for example, add costs.

Equally, a single piece of sophisticated diagnostic equipment, such as an advanced magnetic resonance imaging (MRI) machine, costs millions. Inevitably, all these costs have to be recovered by way of higher medical bills.

Another aspect of increased medical care costs is associated with an aging population. Health care is needed more by the elderly than by the young (except for babies and toddlers).

Onset of chronic illnesses, such as diabetes, hypertension, and arthritis, is common at an advanced age, with some senior citizens having multiple conditions.

By imposing age limits, medical insurers protect themselves, but social pressures and increased demand for medical cover have pushed these limits upwards. This aspect has contributed to a higher claims ratio and this, inevitably, translates to an escalation of premium rates.

The medical fraternity, through the Kenya Medical Association, has been apprehensive about managed health care and, mainly, the way it was introduced and practised in Kenya.

Their major concern has been the compromised quality of health care. On the other hand, medical insurers are particularly concerned about costs.

However, all agree that “health is not everything but without health, everything is nothing.”

In time, hopefully, the contradictory perspectives will be resolved. After all, health care funding, by whichever appropriate means, is inescapable.

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